Is There a January Late-Fee Spike?

If I am someone who profits from other people paying their bills late — a big landlord, perhaps, who charges a 5 percent late fee on rents — I would have to think that January is my favorite month.

Why? So many people are traveling during late December, or having their schedules otherwise interrupted, or are perhaps afraid to open the mail at all since they’ve built up such large credit card bills, that they don’t get around to making their January payments on time. (And this is to say nothing of “breakage,” the unredeemed amount of gift cards, which also spikes this time of year; here’s what we wrote on the subject last year.)

I tend to be pretty prompt with bills myself, but January is always a tough deadline. Perhaps August is even worse, when people are also traveling?

I haven’t run across any data on late-fee monthly surges; have you? And has anyone else noticed the January (or August) problem?


Tangentially, a 5% late fee on rent would probably be illegal in many states because it is not considered reasonable. Anything over circa $30 would not hold up in court.

Of course if you pay late, the landlord can always refuse to accept payment and evict you.


Somewhat related to this: Does everyone's credit card bill them on (or very near) the 25th of each month? Mine does, and I'm pretty sure it is done this way just to bill for Xmas charges as quickly as possible.


I know I paid my rent a week or so late this January. However, my landlord is not a money-grubber so no worries about any surcharge.
I think January would see more lateness because not everyone can afford to go away on vacation in August (for example, us poor grad students) but at Christmas, there is much more pressure -- if you go visit your parents once during the year, it's probably going to be then.


if the data does bear out this behavior, my initial theory for why it would occur in January is that too many people stretch their finances in December for gift giving.


Landlords happy about late fees? That seems unlikely.

Do the decision tree: a late renter might generate a few extra dollars for a late fee, if applicable, but this also creates some likelihood that they are close to the edge and will stop paying, producing the headache of large receivables, cash flow disruption, and potential eviction hassles.

If anything, landlords might consider discounts for autopay clients.

Joe D


Every state has different late fees. Most are "lesser of x% and $y", but Idaho, for example, is the greater of 5% of the delinquent installment or $15 ($12.50 if it's a precomputed contract). Other "greater of" states include Illinois, Louisiana, Minnesota, Oklahoma, South Dakota, Utah, West Virginia (precomputed only), and Alabama (which does have a $100 maximum).

I don't know if these apply to rent: my expertise is in consumer lending.


I could try and see if there were more late payments on the loans at my bank, but these days it seems rare if someone pays on time. An early payment might come once in a blue moon.


Shame on them! Although I would never know because I'm one of those charmed ones who pays her bills with auto pay and my credits never been better! Now if auto pay could only do my dishes....


Way back in the Stone Age before direct deposit of paychecks, my local paper ran a story about all the people who would be in trouble because of their payday and New Year's Day, which was on a Friday. People who got paid on the 1st would not be able to deposit or cash their paychecks until Monday, the 4th. Most landlords in the area considered rent late past the 3rd. So you'd better have an extra month's rent in the bank.


I've learned the hard way to pay my bills ahead of time. Whatever you would earn by holding on to your own cash for a few extra days is far outweighed by the risk of even one late charge. I have a related question. I notice that my credit card companies periodically change the due dates on monthly payments. Some months the 1st, some the 4th, some the 7th, etc. I suspect this is a deliberate attempt to lull people into miscalculating when they should make payments, in order to create late charges. If so, I think a class action is appropriate. I'm an attorney in Tucson, AZ. If you have actual evidence of this, look me up. It would be fun to stick it back to them.


My credit card company did exactly what youre talking about Ethan. My bills had always been due sometime after the 10th of the month, but last month they switched it to be due on the 6th. Of course, they only notified me of this on the paper bill itself, and since I pay my credit card online, i was not aware of this change until I tried to pay my bill on the 8th. Luckily, I was able to call and complain and they removed both the late fee and the finance charges.


As a landlord, I'm not eager to collect late fees. I charge them only to encourage the tenants to pay on time. I have to pay the mortgages at the same time as the rents are due, and if the rents are late, it is a stretch for me to cover my expenses. We landlords aren't all moneygrubbers, and are often on tight budgets just like the renters.


I've been hit with late charges on credit cards when I go away on vacation. I try to pay them before I leave, but if the bill hasn't arrived, I'm not sure what to pay. I could pay something but I hate paying any of the bill before I've actually looked at it. I'm not sure I want to try to get my money back from the credit card company should any of the charges be fraudulent. And, I charge everything to my cards (cash? what's cash?) so if I make just a token payment, they are going to nail me with those absurd interest rates. I never, ever run a balance.

I haven't found a good solution to this problem besides not going on extended vacations when my bills are coming due.


As well as the credit card billing window closing I also find that the "due" date more often than not is a Saturday or Sunday - or January 1 I found last month. So yopu have to pay early to keep yourself free of late fess. My cable company likes weekend due dates as well...


May be it's true, I did pay my rent late this month and the property management has charged me about 8.75% of my rent as late fee. When I talked to the accountant she said "we allow one late payment and this was your second late payment", I was surprised and asked when did I pay late previously as I don't remember getting any note from the management. Response was that they don't have to send a note when someone is late first time, so I sent an e-mail to the property manager and the regional manager to ask

(a) Is it your policy not to send a note when someone is late first time so that you can charge late fee next time?

(b) How will someone know how many late payments management allows each individual?

No response as of now and it does look like they make a lot of money.

Gary G

I used to work for a cable (TV) company, and it was expected that more customers would pay late around and after Christmas. Rather than dinging them for fees, however, the practice in this company was to be more lenient with the overdues during this period, giving a longer "grace" period before doing anything vindictive. A nice company in many ways.


I think some phone deals are instances of a similar principle. I get cheap calls during the night up to 10 minutes, but if I go 10:03 then the cost is a great deal more. Likewise my mum has free 5 minute calls under certain conditions, but if she exceeds 5 minutes, the cost is high. I think the phone companies make a lot of their money out of customers narrowly exceeding the time limits.


Don't know what you're talking about. Here in Germany, everybody just withdraws money from my account whenever they think it's due, and I get a week or so to reverse any such withdrawal - no questions asked (by the bank). Never been late that way. Delved into the "allowed overdraft" (Dispositionskredit) once or twice, but only for very short periods and due to the very reasonable APR on the dispo, ended up paying something like 3 or 5 Euro for it.


I think the due dates of credit card bills change because the "billing cycle" is 28 days, so two back to back months of 31 days means the due date will come earlier in the month (think Dec, Jan, then Feb...).

Also, I pay my credit cards on-line through the credit card website, because they allow me to pay up to 5 p.m. the day the bill is due for it to be considered on time. This applies even if the due date is a holiday or a weekend. The slow and sometimes unreliable standard mail service is what caused me to look into this form of payment in the first place. (Plus - you can pay your bills even if you are on vacation).


I have worked in the credit card industry for 17 years now, and your hypothesis is spot-on. There is a much larger incidence of late fees during December, both because of the traveling and distractions that cause people to overlook their bills and the cash-flow crunches that some face. Late fees also spike a bit in the summer months due to vacations.